Position Sizing Methods Compared: Fixed, Percentage, Volatility-Based
Four position sizing methods compared. Which one is best for CFD trading? Four position sizing methods compared. Which one is best for CFD trading?
Method 1: Fixed Dollar
Risk a fixed amount per trade. Simple but does not scale with account size.
Method 2: Fixed Percentage
Risk 1% of current account. Scales automatically. The professional standard.
Method 3: Volatility-Based
Use ATR to adjust position size by volatility. Normalises risk across instruments.
Method 4: Kelly Criterion
Mathematical optimum based on win rate and payoff. Use quarter Kelly for safety.
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.